Q1 2024 Interim Results
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CALGARY, May 30, 2024 - Arrow Exploration Corp. (AIM: AXL; TSXV: AXL) ("Arrow" or the "Company"), the high-growth operator with a portfolio of assets across key Colombian hydrocarbon basins, announces the filing of its Interim Condensed (unaudited) Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2024 which are available on SEDAR (www.sedar.com) and will also be available shortly on Arrow's website at www.arrowexploration.ca.
Q1 2024 Highlights:
- Recorded $14.4 million of total oil and natural gas revenue, net of royalties, more than double compared to the same period in 2023 (Q1 2023: $6.9 million).
- Net income of $3.2 million (Q1 2023: $3.0 million).
- Adjusted EBITDA(1) of $10 million more than double compared to 2023 (Q1 2023: $4.4 million).
- Average corporate production up 139% to 2,730 boe/d (Q1 2023: 1,144 boe/d).
- Realized corporate oil operating netbacks(1) of $56.27/bbl.
- Cash position of $11.6 million at the end of Q1 2024.
- Generated operating cashflows of $8.6 million (Q1 2023: $2.4 million).
- Successfully drilled four development Carrizales Norte (CN) wells, resulting in additional production and reserves additions.
(1)Non-IFRS measures - see "Non-IFRS Measures" section
Post Period End Highlights:
- Drilled two additional CN development wells.
- Spud the first CN Horizontal well ("CNB HZ-1") from the Carrizales Norte B ("CNB") pad. The Company expects to be able to provide an update on the production figures for CNB HZ-1 in the coming weeks. Subject to successful completion, CNB HZ-1, in conjunction with the other three planned CNB HZ wells, are expected to result in a positive increase in Arrow's production rates.
Outlook:
- Continued monitoring of the drilling of the horizontal wells at Carrizales Norte B pad.
- Completing stimulation efforts at the Oso Pardo-3 and 4 wells in the Middle Magdalena Basin.
- Continuing with the balance of the 2024 capital program, the majority of which will be focused on the Carrizales Norte field and will include three horizontal wells. Low risk step-out and exploration wells are also planned at the Mateguafa Attic and Baquiano prospects. The 2024 capital program will be self-funded by a combination of cash flow from operations and cash reserves.
Marshall Abbott, CEO of Arrow Exploration Corp., commented:
"In Q1 2024, Arrow experienced its strongest quarter to date for production and EBITDA. The Q1 2024 wells drilled, at the Carrizales Norte discovery, explored the extent of the C7 and Ubaque reservoir and gathered further data for the horizontal drilling program. Horizontal wells have been determined as the best way to develop the Ubaque reservoir and are expected to thrust Arrow to the next level for production and stability. The water disposal plan has also made great strides forward with the first disposal well at RCE being brough on production and the CN-4 well's conversion currently waiting on regulatory approval. Management remains confident in the Arrow team to execute on the planned exploitation campaign pursuing our opportunity rich portfolio and getting shareholder value to the next level."
FINANCIAL AND OPERATING HIGHLIGHTS
| (in United States dollars, except as otherwise noted) | Three months ended March 31, 2024 | Three months ended March 31, 2023 |
|---|---|---|
| Total natural gas and crude oil revenues, net of royalties | 14,404,921 | 6,992,860 |
| Funds flow from operations (1) | 7,210,683 | 4,240,603 |
| Funds flow from operations (1) per share - | ||
| Basic($) | 0.03 | 0.02 |
| Diluted ($) | 0.02 | 0.01 |
| Net income | 3,176,727 | 2,989,735 |
| Net income per share - | ||
| Basic ($) | 0.01 | 0.01 |
| Diluted ($) | 0.01 | 0.01 |
| Adjusted EBITDA (1) | 10,021,140 | 4,271,726 |
| Weighted average shares outstanding - | ||
| Basic ($) | 285,864,348 | 222,717,847 |
| Diluted ($) | 292,791,385 | 288,639,348 |
| Common shares end of period | 285,864,348 | 228,979,841 |
| Capital expenditures | 6,281,328 | 4,271,693 |
| Cash and cash equivalents | 11,606,343 | 12,354,424 |
| Current Assets | 20,779,081 | 15,849,150 |
| Current liabilities | 11,258,252 | 13,315,499 |
| Adjusted working capital (1) | 9,520,829 | 9,325,680 |
| Long-term portion of restricted cash (2) | 237,814 | 831,048 |
| Total assets | 64,579,940 | 53,719,944 |
| Operating | ||
| Natural gas and crude oil production, before royalties | ||
| Natural gas (Mcf/d) | 1,760 | 4,221 |
| Natural gas liquids (bbl/d) | 4 | 6 |
| Crude oil (bbl/d) | 2,432 | 434 |
| Total (boe/d) | 2,730 | 1,144 |
| Operating netbacks ($/boe) (1) | ||
| Natural gas ($/Mcf) | ($0.14) | $0.73 |
| Crude oil ($/bbl) | $56.27 | $48.94 |
| Total ($/boe) | $50.10 | $20.16 |
(1)Non-IFRS measures - see "Non-IFRS Measures" section within this MD&A
(2)Long term restricted cash not included in working capital
Discussion of Operating Results
The Company increased its production from new wells at CN which allowed the Company to continue to improve its operating results and EBITDA. There has been a decrease in the Company's natural gas production in Canada due to natural declines.
Average Production by Property
| Average Production Boe/d | Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | Q1 2023 | Q4 2022 |
|---|---|---|---|---|---|---|
| Oso Pardo | 166 | 80 | 93 | 130 | 138 | 115 |
| Ombu (Capella) | - | - | - | - | 80 | 238 |
| Rio Cravo Este (Tapir) | 1,644 | 1,326 | 1,443 | 1,592 | 1,004 | 832 |
| Carrizales Norte (Tapir) | 622 | 621 | 642 | 57 | - | - |
| Total Colombia | 2,432 | 2,027 | 2,178 | 1,779 | 1,222 | 1,185 |
| Fir, Alberta | 78 | 80 | 81 | 77 | 74 | 79 |
| Pepper, Alberta | 220 | 228 | 259 | 313 | 340 | 472 |
| TOTAL (Boe/d) | 2,730 | 2,335 | 2,518 | 2,169 | 1,635 | 1,736 |
For the three months ended March 31, 2024, the Company's average production was 2,730 boe/d, which consisted of crude oil production in Colombia of 2,432 bbl/d, natural gas production of 1,760 Mcf/d and minor amounts of natural gas liquids from the Company's Canadian properties. The Company's Q1 2024 total production was 138% higher than its total production for the same period in 2023.
Discussion of Financial Results
Three months ended March 31
| 2024 | 2023 | Change | |
|---|---|---|---|
| Benchmark Prices | |||
| AECO ($/Mcf) | $2.55 | $3.28 | (22%) |
| Brent ($/bbl) | $84.67 | $79.21 | 7% |
| West Texas Intermediate ($/bbl) | $76.95 | $76.10 | 1% |
| Realized Prices | |||
| Natural gas, net of transportation ($/Mcf) | $1.87 | $2.11 | (11%) |
| Natural gas liquids ($/bbl) | $66.20 | $66.13 | 0% |
| Crude oil, net of transportation ($/bbl) | $73.31 | $73.31 | 0% |
| Corporate average, net of transport ($/boe) | $66.58 | $57.23 | 16% |
(1)Non-IFRS measure
Operating Netbacks
The Company also continued to realize strong oil operating netbacks, as summarized below:
Three months ended March 31
| 2024 | 2023 | |
|---|---|---|
| Natural Gas ($/Mcf) | ||
| Revenue, net of transportation expense | $1.87 | $2.11 |
| Royalties | ($0.10) | (0.19) |
| Operating expenses | ($1.91) | (2.34) |
| Natural gas operating netback (1) | ($0.14) | ($0.42) |
| Crude oil ($/bbl) | ||
| Revenue, net of transportation expense | $73.31 | $73.31 |
| Royalties | ($9.00) | (9.11) |
| Operating expenses | ($8.04) | (5.88) |
| Crude oil operating netback (1) | $56.27 | $58.31 |
| Corporate ($/boe) | ||
| Revenue, net of transportation expense | $66.58 | $57.23 |
| Royalties | ($8.08) | (6.98) |
| Operating expenses | ($8.40) | (8.03) |
| Corporate operating netback (1) | $50.10 | $42.21 |
(1)Non-IFRS measure
The operating netbacks of the Company remained strong in Q1 2024 due to several factors, principally the increase in production from its Colombian assets and increased crude oil prices. In Cananda, decreases in natural gas prices were offset by reduced operating expenses for natural gas.
During the first three months of 2024, the Company incurred $6.3 million of capital expenditures, primarily in connection with the drilling of four CN wells and civil works completed in the Baquiano pad in the Tapir block to get it ready for drilling. This accelerated tempo is expected to continue during the remainder of 2024, funded by cash on hand and cashflow.
About Arrow Exploration Corp.
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